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First Reserve, SK Capital strike $627m TPC Group deal

28 Aug 2012

Buyout houses First Reserve and SK Capital Partners have bought chemical-maker TPC Group for $627m in a take-private deal.

The Texas-based company provides highly-specialised chemicals used in synthetic rubber, fuel additives, plastics and surfactants, but has seen demand for its main tyre product dry up in recent months.

First Reserve and SK’s deal is valued at $850m including net debt, and is expected to close in the fourth quarter.

Financing was provided by Bank of America Merrill Lynch, Morgan Stanley Senior Funding and Jefferies and its affiliates.

The $40-a-share purchase represents a 20 per cent premium to the company’s closing stock price on July 24, the last day before media reports of the deal emerged, but is well short of the $47.03 it reached on March 16.

First Reserve director Neil Wizel said the growth investor had targeted TPC to help the company capitalise upon interest in US shale considerations.

SK Capital managing director Jack Norris said, “We firmly believe in management’s strategy of enhancing TPC Group’s ability to serve customers in structurally short markets through the restart of idled assets.

“Partnering with First Reserve in this acquisition leverages the strengths of our respective sector franchises and positions us well to support management’s growth initiatives.”

The deal has been approved by TPC’s board of directors and will go before a special meeting of shareholders “as soon as practicable”, the company said.

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